RIO DE JANEIRO, Brazil (Reuters) -- Struggling to pay for fuel and with part of its fleet grounded, Brazil's troubled airline Varig said Wednesday it canceled most flights to the United States and some to Europe, at least until June 28.
The airline, which has been operating under bankruptcy protection for the past year, said it will no longer fly to New York and Los Angeles, California, for the time being, leaving Miami, Florida, as the sole destination it will serve in the United States.
It also canceled some flights to other Latin American countries and to Europe, but will continue flying to London, England, and Frankfurt, Germany -- two of its most profitable international routes.
Strapped for cash and faced with the prospect of having to return a large part of its fleet to creditors for failing to make lease payments, Varig has been canceling flights on a daily basis for weeks. On Tuesday alone, it canceled more than 100 flights -- or more than half of its daily routes.
The cancellations prompted Brazil's National Civil Aviation Agency on Wednesday to implement an emergency plan to accommodate Varig passengers who have been stranded.
As part of the plan, Varig's main domestic rivals -- TAM Linhas Aereas and Gol Linhas Aereas Inteligentes -- will accept as many Varig tickets as possible. They also could charter additional aircraft if needed.
Varig said Tuesday that it had grounded six planes to comply with a court order in the United States, where several leasing companies have filed lawsuits against the airline seeking the return of their aircraft.
An additional 14 of Varig's planes also are grounded because it cannot afford to pay maintenance costs, leaving it with just 35 in the air of a total fleet of 60, according to the airline's chief executive, Marcelo Bottini.
Varig could be forced to ground more of its planes if a U.S. Bankruptcy Court in New York decides later Wednesday not to extend an injunction blocking creditors such as the International Lease Finance Corp. and Boeing Co. from seizing planes they have leased to the airline.
The hearing in New York comes just two days after the Brazilian judge overseeing Varig's bankruptcy proceedings approved the sale of the airline to a consortium of investors led by a Varig employee group called TGV for $449 million.
If the group does not make a down payment of $75 million by Friday, the sale will be considered void. That could force the Brazilian court to hold another auction to try to find a new buyer or force the airline into liquidation.
Varig, once Latin America's largest airline, is saddled with more than 7 billion reais ($3.1 billion) in debt. For years it has been losing money and market share to more cost-efficient rivals such as TAM and Gol.